In just a few years, your hospital could lose a significant amount of money if its 30-day readmission rate is higher for Medicare patients with certain diagnoses than the rate at other hospitals.

Beginning with admissions on or after Oct. 1, 2012, under the Patient Protection and Affordable Care Act, hospitals with risk-adjusted readmission rates in the highest 25% will face a 1% reduction in reimbursement for every discharge in fiscal year 2013, not just the conditions on which they report data.

The penalties, part of the Centers for Medicare & Medicaid Services' (CMS') value-based purchasing initiative, will rise to 2% the following year and to 3% for admissions after that.

The penalties won't be imposed for three years, but hospitals need to start now to analyze their 30-day readmissions and develop initiatives to reduce them, says Toni Cesta, RN, PhD, FAAN, senior vice president, operational efficiency and capacity management at Lutheran Medical Center in Brooklyn, NY, and health care consultant and partner in Case Management Concepts LLC.

"Up until now, there was no penalty for readmission from a financial perspective, so there's been no financial incentive for hospitals to reduce readmissions. That's all changed, and the penalties for having a high rate of readmissions will be significant. How hospitals perform now will determine how much they're likely to lose in the future," Cesta says.

Evidence from pilot projects and research studies suggests that rehospitalization can be reduced with better discharge planning, enhanced transitions between health care settings, and additional coaching and education to help patients learn to manage their condition and adhere to their treatment plan, according to a 2009 report by the Institute for Healthcare Improvement.

But so far, many of the promising interventions have been adapted by and funded by health plans, not health care providers.

For instance, several large health plans have saved money and readmissions by adapting the Transitional Care Model developed by Mary Naylor, PHD, RN, and colleagues at the University of Pennsylvania School of Nursing, according to Kathryn H. Bowles, PhD, RN, FAAN, associate professor of nursing, University of Pennsylvania School of Nursing.

The insurers use advanced practice nurses employed by home care agencies to coordinate care throughout the continuum.

"At this point, hospitals don't face any penalties if patients are readmitted," adds Brian Jack, MD, associate professor of family medicine at Boston University Medical Center, who led the team that developed Project RED (Re-Engineered Discharge).

The hospitals that are implementing Project RED are mostly working with case managers or nurses who are hired by a health plan, Jack says.

Reducing readmissions is important not just from a financial standpoint but from a patient safety and quality standpoint, he adds.

"When the patient safety movement began, we identified transitions in care as an opportunity to improve safety and quality. We focused on hospital discharges as an important transition because they are low-hanging fruit. There are 38 million hospital discharges a year, and it's very clear that there are enormous opportunities for improvement," Jack says.

The hospital stay is just part of the overall continuum of care, points out Daniel D. Dressler, MD, MSc, SFHM, associate professor of medicine, associate director, medical education, section of hospital medicine at Emory University School of Medicine in Atlanta and a mentor to hospitals implementing the Society of Hospital Medicine's Project BOOST.

"With the new reimbursement rules from CMS, hospitals are going to have to work with providers across the continuum to make sure that patients have the best possible outcomes after discharge," Dressler says.

Hospitals need to work with post-acute providers such as home care agencies and nursing homes to ensure that patients get the care they need so they don't need to be readmitted, Cesta adds.

"Many patients who are readmitted within 30 days haven't seen a doctor and are not taking their medication properly or managing their diet correctly," Cesta says.

CMS posted updated 30-day readmission rates on the Hospital Compare website in July. The new data encompass three full years of claims data from July 1, 2006, to June 30, 2009.

The new data showed that national 30-day readmission rates for heart attack, heart failure, and pneumonia did not change remarkably from the 2005-2008 rates. The rates were 19.9% for heart attack patients, 24.7% for heart failure patients, and 18.3% for pneumonia patients.

Programs that provide beefed-up discharge education and support for patients after discharge have demonstrated decreases in readmissions and emergency department visits. Here's a look at some of them:

Care Transitions Program:

In the Care Transitions Intervention, a transition coach, who is a nurse or a nurse practitioner, facilitates care for a month after hospital discharge for patients 65 or older who return to the community.

The transition coach visits patients in their home within 72 hours of discharge and speaks to the patient by phone on post-discharge days one, seven, and 14.

The Care Transitions Program team at the University of Colorado developed the Care Transitions Intervention 12 years ago after interviewing patients with complex medical needs and their family members to learn about their experiences with care transitions.

"We learned that even when people have terrific primary care physicians, case managers, and home care nurses, they still do a significant amount of their own care coordination. In many care coordination models, well-trained professionals identify the problems and fix them. That takes you only so far. We wanted the patients to be able to manage their care on their own when the professional isn't there," says Eric A. Coleman, MD, MPH, a geriatrician who is director of the Care Transitions Program and a professor of medicine at the University of Colorado School of Medicine.

The main components of the program, called the Four Pillars, include teaching patients medication self-management, educating them to recognize warning signs and symptoms and what to do when they occur, ensuring follow-up care with a primary care physician, and facilitating patient ownership of their personal health record.

"The program is truly patient-centered. We teach the patients self-care by practicing and role playing," Coleman says.

When the transitions coach visits the home, he or she asks the patient to identify health-related goals, identifies any barriers, and works with them to develop strategies to meet the goals.

"Often when patients with chronic diseases aren't doing what we tell them to, we label them as noncompliant without looking at the broader barriers," he says.

The coach goes over the patient's medication list, asks him or her to describe the medications and how to take them, then compares the medication the patient was taking before hospitalization to the discharge medication list.

"Inevitably, there is a discrepancy. Instead of fixing the problem, the coach discusses what steps the patient should take to eliminate the discrepancy so the patient will be able to do that on his own when another question arises," Coleman says.

The coach assumes the role of the physician, pharmacist, or home care nurse and lets the patient practice how he or she will resolve the problem.

"Patients often feel reluctant to interrupt the doctor. This gives them a chance to practice and build confidence," Coleman says.

The coach takes the patient through a similar scenario when it comes to getting a timely follow-up visit with a physician.

The Care Transitions Program has fostered the adoption of the Care Transitions Intervention by more than 300 organizations including hospitals, home care agencies, large physician groups, and home care agencies.

It provides materials and training, but the organizations make their own decisions on how to determine which patients are eligible for the program.

Studies have shown that patients who participate in the Care Transitions Intervention were significantly less likely to be rehospitalized and more likely to achieve personal self-care and medication management goals.

Investigators in one study estimated the cost savings associated with the Care Transitions Intervention would be $296,000 over 12 months for 350 patients.

Project BOOST (Better Outcomes for Older adults through Safe Transitions) was created by the Society of Hospital Medicine with grant support from the John A. Hartford Foundation. The program was piloted at six hospitals and now provides training and support for a total of 47 sites where the project has been rolled out.

With Project BOOST, mentors work with hospitals and provide resources that enable the hospitals to identify patients at high risk for readmission and take steps before and after discharge to prevent the readmission.

"This started as a project that focused on the elderly but has been piloted addressing all adult patients," says Dressler. Project BOOST aims to reduce the 30-day readmission rates for general medicine patients, with a particular focus on older adults, improve patient satisfaction and HCAHPS scores, improve the flow of information between hospitals and community physicians, identify high-risk patients and target specific interventions to mitigate their risks for adverse events, and ensure that patients and family members are prepared for discharge.

The process has four key elements:

a comprehensive intervention;

a BOOST implementation guide that provides step-by-step instructions and tools to help multidisciplinary teams plan, implement, and evaluate the intervention;

a mentoring program that includes face-to-face training and a year of mentoring and coaching;

and the BOOST collaborative, through which sites communicate with each other and share ideas.

Hospitals participating in the process use Project BOOST screening tools to identify and manage patients at risk for readmission and tools that address whether patients are prepared to care for themselves after discharge, if they can identify when and who to call if problems arise, and if they have appointments for follow-up physician visits and tests.

"The project is institution-specific as to who performs the interventions. In some hospitals, I've worked with nurses, case managers, social workers, and physicians to perform some of the interventions, depending on how the facility breaks it down. Case managers play a critical role in the implementation of a BOOST project," Dressler says.

The project includes a teach-back training video for case managers, nurses, and physicians to help them learn to use the teach-back methodology to ensure that patients understand their diagnoses, medications, and follow-up.

"One of the key components within the BOOST project is assurance of adequate and timely transfer of information from one provider to another," Dressler says.

The project calls for transmittal of a discharge summary immediately to the clinicians providing follow-up care and follow-up telephone calls to patients within 48 to 72 hours to make sure they understand their plan of care and to answer any questions and concerns.

Depending on the facility, the follow-up calls are made by nurses, case managers, or pharmacists.

Preliminary data from pilot project sites demonstrate that readmissions in BOOST units fell from 13% to 11% in six months, while similar non-BOOST units experienced a rise in readmission rates from 11% to 13% over the same interval.

In Project RED (Re-Engineered Discharge), a nurse or case manager called a discharge advocate works with patients to educate them during their stay, organize post-discharge services, and expedite the flow of information to caregivers after discharge.

Boston University Medical Center's research team developed the Re-Engineered Hospital Discharge Program, over a five-year period with a grant from the Agency for Health Research and Quality (AHRQ) and the National Heart, Lung and Blood Institute.

The program is designed to educate patients about their post-discharge care plans, ensure that patients receive the recommended follow-up care, and increase communication between the hospital and the patients' primary care physicians.

The discharge advocate educates the patient about his or her diagnosis throughout the hospital stay; makes follow-up appointments with clinicians and for post-discharge tests; sets up post-discharge services and makes sure the patient understands the importance of the services; reconciles the patient's medications and makes sure the patient and family understand the medication regimen; educates the family and patient on what to do if a problem arises; and ensures that outpatient providers receive a discharge summary in a timely manner.

The nurses, who work full-time on discharges, can facilitate four to six discharges every day, says Jack. The RED process calls for patients to receive phone calls two to three days after discharge to reinforce the discharge plan and answer questions and concerns.

"Half the people who go home are doing something that's not quite right. The follow-up calls are designed to fix the problems," Jack says.

Follow-up calls may be made by a nurse, a pharmacist, or another clinician.

"The follow-up phone call is part of the package. The hospital component is important, but it's not sufficient," he says.

One of the principal features of Project RED is a personalized after-hospital care plan, a spiral-bound color booklet that includes individual information for each patient, depending on his or her condition, medication, and discharge instructions.

The discharge advocate uses special computer software to create the booklet and assess the patients' understanding of the plan by asking them to describe the plan in their own words.

The team at Boston University Medical Center has developed a virtual discharge advocate, named "Louise"  an animated character that educates the patient via computer and tests them on how well they understand their discharge plan. When the discharge advocates print out the test results, they can see where gaps in the patient's understanding occur and can reinforce the teaching.

"Patients have said they prefer 'Louise' to a human teacher because the virtual advocate allows them to go at their own pace," Jack says.

A pilot study using the Re-engineered Discharge concept shows that people enrolled in the study had fewer readmissions and emergency department visits and that their post-acute care cost an average of $412 less when compared to people with similar diagnoses in a control group.

Transforming Care at the Bedside (TCAB), a program launched in 2003 by the Robert Wood Johnson Foundation and the Institute for Healthcare Improvement, aims to improve transitions of care for patients discharged from medical and surgical units within hospitals.

"It takes a whole community to improve transitions and create continuity in care so patients avoid coming back to the hospital unnecessarily. The aim is not to keep people out of the hospital who want to be there, but we want to prevent rehospitalizations that are avoidable. Avoidable rehospitalizations can occur because of pool care processes, lack of timely communications, and inadequate care coordination in the health care system," says Pat Rutherford, RN, MS, vice president at the Institute for Healthcare Improvement.

Ensuring a smooth transition is not just the responsibility of hospital discharge planners, but is a responsibility of the entire care team within the hospital and in collaboration with community partners, Rutherford points out.

"Community clinicians and post-acute providers of care must work hand-in-hand with hospital personnel to design processes that improve communication and hand-off," she says.

"Whoever is going to provide care for patients after discharge, whether it's family members or post-acute facilities or agencies, should have all the information they need to ensure that the patient follows the treatment plan and receives the necessary follow-up care," Rutherford says.

"TCAB's goal is to improve transitions of care within the health care system by promoting better discharge preparation while patients are in the hospital, providing timely information to help community physicians provide follow-up care, and improving transfers to skilled nursing facilities, rehabilitation facilities, and home care agencies," she says.

The Transforming Care at the Bedside process focuses on enhanced admission assessment for post-discharge needs; enhanced teaching and learning during the hospital stay; patient- and family-centered hand-off communication; and early post-acute care follow up.

Rutherford recommends that hospitals apply the standards of care to all patients, not just those who are at risk for readmission.

A comprehensive assessment for post-discharge needs is a major component of the TCAB process, Rutherford says.

"Most case managers and nurses say they are currently assessing patients to determine their needs after discharge, but we recommend that family caregivers and community providers contribute to a more comprehensive needs assessment," Rutherford says.

For instance, the assessments don't always include information about whether the patients have the money to buy their medication, if they have transportation, or their living situation.

"Case managers and discharge planners need a better understanding of the social and health care needs that patients face at home. Using this information, they can make referrals to organizations that can help the patients get the help they need," she says.

People who are at high risk need additional services to help them stay well at home or in a long-term care hospital or skilled nursing facility, Rutherford adds.

If patients are going home, family members should be involved in the educational process while patients are still in the hospital, she says.

Patients at risk for readmissions should have a visit by a home care nurse or see a physician within two days. Those at lower risk should receive a follow-up phone call within 48 hours and see a physician within five days, Rutherford says.

TCAB calls for customizing education to the patient and using the teach-back method to ensure that the patients understand.

Clinicians can get a good idea of patients' understanding of their condition and treatment plan by asking just three questions, Rutherford says:

Do you understand what your problem is?

Do you know what you need to do to take care of yourself at home?

Do you know what signs and symptoms to look for and who to call if they occur?

St. Luke's Hospital in Cedar Rapids, IA, documented a 50% reduction in rehospitalizations for heart failure patients when it adapted the approach.

In the Transitional Care Model, master's prepared nurses, skilled in working with older adults, coordinate care for high-risk, elderly patients with chronic illnesses throughout the continuum of care.

The original program was created by Naylor and her colleagues at the University of Pennsylvania School of Nursing as a way of helping chronically ill older adults transition from the hospital to home with follow-up phone calls, says Bowles.

"The team recognized that the telephone calls were helpful but not enough in the long term. We created a transitional care model led by advanced practice nurses who meet the patients during their hospital stay, meet the providers, coordinate the discharge plan with the hospital treatment team, and follow the patients back into the community," she says.

In the model, the advanced practice nurses typically are employed by home care agencies and reimbursed by private insurance.

The nurses visit the patients daily while they are in the hospital, complete an assessment, and collaborate with other members of the treatment team to develop a plan of care. They visit patients in the home, helping them learn how to manage their disease and adhere to their plan of care, and contact them by telephone regularly for an average of two months after discharge.

"The nurses go into the home within 24 hours of discharge, complete a comprehensive assessment, educate the patients about their disease and their plan of care, and coordinate the care between multiple providers," Bowles says.

The nurses accompany patients to the doctor's office, particularly during the first post-discharge visit, to ensure that the transition between hospital and home goes smoothly.

As the time approaches for patients to be discharged from the program, the nurse sets up the hand-off to the primary care physician or other provider.

"We have a recruiter at a hospital who uses a risk screening tool to identify people for the program. When someone is eligible and agrees to participate, the advanced practice nurse gets involved immediately, becomes part of the treatment team, and begins to build a rapport with the patient and family," she says.

The nurses typically coordinate care for 10 to 20 patients at a time. If they are working with newly transitioned patients, their case load is lower because the needs of the patient at hospital discharge are more intense.

The University of Pennsylvania School of Nursing team has formed partnerships with several health plans to assist them in setting up the model in association with home care agencies. Naylor and her staff provide materials and tools, train the nurses, and assist in getting the programs up and running, she says.

In one study, 10% of patients in the Transitional Care Model were readmitted within six weeks after discharge while 23% of similar patients in a control group were readmitted. In another study, total health care costs for Transitional Care Model patients (readmissions, emergency department visits, unscheduled acute care visits, and care provided by visiting nurses or other health care professionals) was an average of $5,000 less over a one-year period.

"Based on these studies, we know that the Transitional Care Model not only provides higher quality care, but saves money even after accounting for the cost of the nurse," Bowles says.